Eureka! MomentsBy Leslie Blair | Posted 2010-04-08 Print
Organizations search for ways to optimize the value delivered by it investments.
There was one especially significant discovery: The IT help desk was spending 35,000 hours a month closing trouble tickets. A closer look revealed that the same set of incidents was reported month after month because the causes of the incidents had not been investigated. An analysis found that the vast majority of the calls related to 10 user issues. Armed with this information, IT addressed the issues, decreased ticket volume, increased user satisfaction and reduced help-desk costs.
Another important finding was that most of the company’s software applications were customized to user needs. There was very little in the way of off-the-shelf applications. Through the analysis, it became clear that the shift from “as-needed customization” to standardized software would be a difficult but highly valuable and necessary cultural adjustment.
The company identified 24 initiatives, which promised potential cost reductions of 18 percent of total IT spend over three years. Of these, four were implemented within the first six weeks of the analysis, producing immediate savings of $10 million. The team also identified $100 million in “shadow” IT spend — spend that was not accounted for in the IT operating budget. This discovery prompted changes in processes, policies and organizational alignment, and reduced total IT spend.
Perhaps most important, the findings exposed the need for a stronger IT-governance structure. It became clear that IT was a service organization and that one of the keys to optimizing its spend was making prudent service choices based on well-defined policies and practices. For this organization, the assessment underscored the importance of IT governance, resulting in new investment policies requiring joint decisions by the requesting business units and the CIO.
Ultimately, senior leadership and the IT organization recognized the value of the assessment because the findings were tightly linked to the firm’s business imperatives. As a result, IT received C-suite buy-in to accelerate the opportunities uncovered by the IT cost optimization.
This demonstrates that organizations can reduce costs and improve overall business performance with IT cost optimization. The process positions them to better understand their data, align strategically, govern effectively, operate efficiently and, most of all, continuously measure the value of IT.
Leslie Blair leads the Advisory practice for Ernst & Young LLP’s West region. The views expressed here are those of the author and do not necessarily reflect the views of Ernst & Young LLP.
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